TESIS MANAJEMEN, 2009

Abstract

Making investment in stock exchange can be performed in various ways, and basically all investment has same aimed, that to get high return but low risk. To overcome and lessen the risk, investor needs to understand the intrinsic value of stock to know the best decision when making the investment. This research is made in order to determine intrinsic value of PT HM Sampoerna Tbk (HMSP)’s stock and PT Gudang Garam Tbk (GGRM)’s stock by using fundamental analysis. The purposes are to know whether the market price of both company’s stock undervalued or overvalued compared with their intrinsic value. There are three approaches using in this research to calculate the intrinsic value of the stock. They are Dividend Discount Modal, Free Cash Flow to Firm (FCFF) and Free Cash Flow to Equity (FCFE). Dividend Discount Model related to present value of all expected future dividends into perpetuity, meanwhile the Free Cash Flow Valuation Model (FCFF & FCFE) views the intrinsic value of a security as the present value of its expected future cash flow. This research is based on financial statement from both company and compare with the market price of both stocks as of July 2009. Valuation based on those three approaches gives the result that market price of HMSP’s stock is undervalued compare with the intrinsic value meanwhile GGRM’s stock is overvalued compare with the intrinsic value. Based on the situation, the recommendation given to the investors who not yet have HMSP’s stock to buy the stock and in contrary for investors who have GGRM’s stock to sell the stock.